ECON 310 C01 Money & Banking 10 July, 2001
Summer 2001
Quiz 1 Name
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agreed to uphold the Honor Code. Should you be caught cheating or attempting to cheat during this quiz, you will be reported to the
Honor Committee. Any student who witnesses a violation of the Honor Code is obligated to report the violation and if the student
fails to report the violation, that student may be in violation of the Honor Code.
Answers†
Multiple Choice
For each question, circle the answer which best completes or best answers the question (2 pts each).
1. Evidence from business cycle fluctuations in the United States indicates that changes in money might
be a driving force behind these fluctuations. Specifically, the evidence suggests that
a) a negative relationship between money growth and general economic activity exists.
b) recessions have been preceded by a decline in the growth rate of money.
c) recessions have been preceded by an increase in the growth rate of money.
d) recessions have been preceded by an increase in the growth rate of money and followed by a
substantial decrease in money growth.
2. The bond markets are important because
a) they are the markets where interest rates are determined.
b) they are the markets where foreign exchange rates are determined.
c) they are easily the most widely followed financial markets in the United States.
d) of each of the above.
e) of only (a) and (b) above.
3. Which of the following can be described as involving direct finance?
a) A corporation issues new shares of stock.
b) People buy shares in a mutual fund.
c) A corporation takes out a loan from a bank.
d) An insurance company buys shares of a common stock in the over-the-counter markets.
4. Which of the following can be described as involving indirect finance?
a) A corporation takes out a loan from a bank.
b) People buy shares in a mutual fund.
c) A corporation buys commercial paper issued by another corporation.
d) Both (a) and (b) of the above.
5. Which of the following are long-term finacial intruments?
†If you find a wrong answer or have a question, email me at [email protected]. If you wish to contest your score, you
must do so in writing. I.e. write down the number of the question and explain why your answer is correct, then hand in your
explanation and quiz to me and I will review it with you.
